Reduction in UK VAT rate

[kev@frames]

a positive move, or not?

[silvercleave]

In MHO The reduction talked about is 2.5%, would this make you rush out and buy anything, it wouldn't me, in fact it would only effect very large purchases where you are unable to claim the VAT back, suggest that if you want a very large boat then it could save you a little, the only people I know with boats of that size end up with the company owning them. As far as the high street is concerned I cannot see it making any difference, the usual will happen where the prices advertised will indicate a reduction for VAT but the price would have been adjusted up to start with so increasing the profit magin. What do you all think? Don't forget, they made the mess and we will have to pay, Gas in US has dropped from $3.50 per gallon to $1.80 per gallon and this is from end September to today, our fuel has dropped only a fraction of what it should have, Oil is now down below $50 per barrel and why is it that diesel is a lot more expensive than unleaded, this product is cheaper to produce and is just the scrappings of the barrel, perhaps it is because so many people changed to it when it was cheaper to get more mpg, now most people have a diesel engined car they jack the price up, again we are being ripped off in this country . . . as we have been for a long time . . . . Router bits maded in Germany are sold at the same price in £'s here and in USA are sold for the same price in $'s, same item, same factory, more than twice the shipping distance. . . . . . must stop here as I think it will only increase my blood pressure....

Ian

[WelshFramer]

In MHO The reduction talked about is 2.5%, would this make you rush out and buy anything,
Ian

But on the other hand you'll have some extra change left at the end of the week that will buy you a couple of extra pints - or maybe even a bottle of wine.

[silvercleave]

[/quote]

But on the other hand you'll have some extra change left at the end of the week that will buy you a couple of extra pints - or maybe even a bottle of wine. [/quote]

That means that if the reduction is passed on to me, after spending over £200 on goods that have been reduced in price I can buy 2 pints

[framejunkie]

That means that if the reduction is passed on to me, after spending over £200 on goods that have been reduced in price I can buy 2 pints

Think yourself lucky! That's more like a pint and a half in London! Or most of a glass of wine. Don't get me started.

[silvercleave]

Think yourself lucky! That's more like a pint and a half in London! Or most of a glass of wine. Don't get me started.[/quote]

Well as I don't drink pints I had to ask a visitor, but he drinks mainly home brew. but I see now the reduction applies 1st December so will plan my spending carefully . . . . . very carefully . . . . . perhaps a yacht or new car . . . . . I wonder if VAT reduction will apply to these? . . . not many people on the forum today, perhaps a sign of lots of business.

[kev@frames]

personally i think moves like this are just for the sake of the government "being seen to be doing something" - as an aside note that Gordon Brown will get the "credit" (and any blame later) not the Chancellor-

no doubt my accountant in the next few days will give me a "bottom line" figure of how it will affect us -eg. will we pay less vat or more vat this year for the same turnover - i suspect it will be marginally less hence we might get the extra bottle of wine a week
Cant see it making much of an impact to shoppers.

perhaps we'll get the odd whiner who pre-paid an order at 17.5 percent vat and argues about the supply date if he picks it up after Dec 1st....

So when scheduling jobs, if "collection date" is the tax point (supply date) do we start quoting prices for orders placed before Dec 1st but due for collection after that based on the VAT rate at the supply date or the collecton date?

As for those smaller businesses who are not VAT registered, either because of low turnover or deliberated business disaggregation, obviously it is of greater benefit to them because their supply invoices will be 2.5 percent less.

As many of us who do pay VAT are in price competiton from low volume non-vat-registered businesses, does this widen the gap or close it?

Is it a boost for the "small fry" at the expense of the "small business"?

I'll predict after this lowering of the rate, a lowering of the VAT threshold too, in line with the majority of EU countries, which will draw in more small turnover businesses into the VAT system.

Compared to the ROI VAT Rate currently 20 percent, our new temporary 15 percent looks pretty good, I guess. The stuff will hit the fan when they raise the VAT rate again.....

We have been exceptionally busy today both in the shop and online, so there is no issue about people waiting for the rate to drop before doing their shopping.

At the end of the day, tinkering and fiddling with the VAT rate wont make much of an impact on peoples shopping habits at all for the type of retail business most of us are in.

Hence my original post - I cant really see what is good (or bad) about it, and what the big deal is.

[Roboframer]

Yeah, well, when it goes down 2.5% I'll have a 5% price rise!

[kev@frames]

I'm reading from the same page there John - and so will the majority of people, I suspect. "till prices" (money going over the counters) almost everywhere will remain pretty much unchanged (one way or another), the breakdowns will just look different. Higher net price, lower vat, same total.

Interesting to see if the reducton will be reflected in the one thing we seem to use as a "monitor" - the price of petrol at the pumps.

[Not your average framer]

I think that any effect on business or prices will be almost nothing. I expect as per usual we will find that "they give it with one hand and take it back with the other".

It's probably all about grabbing the headlines and trying to look good for the next election. If they wanted to make any meaningful difference they could do a lot better than that!

[silvercleave]

My money is on VAT going back up after 13 months and the excuse that they need to recoup more money hence a new rate of 20%

[Roboframer]

You won't get a bookie to take the first part of that bet - that's the deal!

http://www.direct.gov.uk/en/Nl1/Newsroo ... /DG_172919

[silvercleave]

You won't get a bookie to take the first part of that bet - that's the deal!

Sorry Robo, was poorly worded, but bet that it will be 20% in 13 months time

[prospero]

Who remembers when VAT was 25%? Shops were stripped bare the week before it went up.

IMHO a 2.5% drop won't have much effect. Dropping it to 10% would be better. OK, big loss of revenue, but at least there might be some businesses left to actually pay it when they put it back up.

[kev@frames]

i can't remember vat at 25 percent ? i can remember when it first came in, as my parents were in business it was 8 percent then, and i seem to recall 11 percent and 12.5 and 15 percent.

It has inexorably risen towards general EU levels though, so I'm another one that's resigned to a 20 percent rate sooner rather than later. Any takers on the VAT threshold coming down to drag more people into the VAT system? Then we would have something more like a "free trade area".

VAT was allegedly a "replacement" for purchase tax. But i always remembermy dad saying "its just another tax on our profit", which it is, really, even though we pass on the VAT to customers in theory (collect it from them for the treasury). It was another one of those things about the EU (EEC) where the truth was obfusticated.

Mind you, at the end of the day, whether "Gordons Big Gamble" on the economy will pay off or shaft us remains to be seen, but I suppose we are all in the same boat.

Im wondering though, why not a simple cut in income tax instead of VAT? or is that not marxist enough for the lefties running westminster at the moment?

[Not your average framer]

I suppose some customers will be asking stupid questions about if you are passing on any savings or not!

Not being VAT registered, I suppose they will think I'm gaining some kind of advantage from this. However, having done a few quick calcs, it seems that any saving from this govenment's publicity stunt/con-trick is so small it's a joke!

What a waste of effort for nothing!

[prospero]

Exactly. If they won't pay £117.50 for something , they won't pay £115.00. Anyhow, about 80% of my turnover is with VAT registered trade customers, so what ever VAT I charge them they are going to claim it back anyway.

[framejunkie]

or is that not marxist enough for the lefties running westminster at the moment?

Lefties? Haven't seen any of those in Westminster for some time now. The bunch of management consultants, PR goons, lawyers, and career politicians running the country are about as far left as Ghengis Khan with a headache

[qwerty]

The Government just can't help themselves, how can this be an economic stimulus measure when they are as usual clawing it back in other ways, in this case an increase in NI contributions among other stealth taxes, with those in work and running a business footing the bill.

There never has and there never will be a decrease in taxation in this country, under any government.

[Not your average framer]

There never has and there never will be a decrease in taxation in this country, under any government.

Don't we know it! This govenment is is far worse than others when it comes to stealth taxes.

Has anyone noticed how the national minimum wage is increased during October, but the pay thresholds for registering your staff for PAYE don't increase until the following April. This can be a real pain if you want to employ part time staff and avoid all the hassle with PAYE, etc., as you are forced into PAYE, your part time staff get taxed and earn less, so they leave. These kind of tactics are normal practice for this govenment, it's killing small businesses and now they wonder why the country is in financial trouble.

Gordon Brown has brought this country to it's knees, sold large amounts of our gold reserves and hasn't got a clue what he is doing. He now thinks he can borrow his way out of a recession, when it's the borrowing which has already weakened the economy. We've already borrowed too much and need to stop borrowing and let this country's businesses prosper so they can regenerate the economy.